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Tax Protest Group Barred from Tax Scheme

January 2, 2007

A federal court in Baltimore has permanently barred John Baptist Kotmair, Jr., of Westminster, Maryland, and his organization, "Save-a-Patriot Fellowship," from selling an alleged tax-fraud scheme. The court described Kotmair as a "seasoned tax protester," whose representations about tax laws are "clearly fraudulent."

The court's December 4, 2006, order permanently bars Kotmair and his Save-A-Patriot Fellowship, one of the largest and oldest anti-government tax protest groups in the United States, from representing or assisting any person in preparing communications to the IRS or assisting any other person in preparing court filings relating to income taxes. The order requires the defendants to notify those associated with promoting the scheme and all individuals who participated in it of the injunction, and mandates that the Justice Department be provided information about the customers. Additionally, the order requires Kotmair and his organization to notify customers of the injunction, to post the injunction prominently on their Web sites for one year, and to remove from their Web sites their alleged tax fraud promotional materials.

In 1984, shortly after serving two years in prison for tax evasion, Kotmair allegedly began telling his followers that U.S. citizens do not need to pay any taxes or file tax returns on income earned domestically. This common tax protest argument has come to be known as the "Section 861" argument after a section of the tax code.

The court's opinion states that Kotmair, a former Baltimore police detective, and his organization knowingly made false and fraudulent statements to their customers about the tax benefits of their system. Kotmair allegedly knew or had reason to know that the statements were false because the same arguments had been rejected by other courts, including a 2004 federal court decision barring tax protester Thurston Bell, one of Kotmair's former employees, from selling the same scheme on a rival Web site.

The court additionally found that Kotmair and his organization were fraudulently advising clients that they could legally opt out of the Social Security system.

The court ruled that it was "abundantly clear" that the defendants were in breach of the Internal Revenue Code, and that an injunction was necessary to halt their actions.